You can outsource the job, but you can’t outsource the risk. Four industry experts share strategies for effective SME outsourcing.
What’s happening: Small and medium enterprises face mounting pressure to optimise resources whilst managing increasing complexity across operations, compliance and technology.
Why this matters: Poor outsourcing decisions can expose businesses to significant risks beyond financial loss, including cybersecurity vulnerabilities, compliance breaches and reputational damage.
Small and medium enterprises are rethinking their approach to outsourcing as economic pressures intensify and artificial intelligence reshapes what tasks can be delegated, according to industry experts across consulting, technology and business matching sectors.
The shift represents a fundamental change from viewing outsourcing purely as a cost-cutting exercise to treating it as a strategic capability that requires careful vendor selection, robust risk management and clear understanding of operating models.
Sara Deady, Partner at McGrathNicol Advisory, warns that regulatory and compliance obligations remain with the business regardless of outsourcing arrangements.
“The management of outsourced providers has never been so important. Gone are the days of being able to say, ‘I outsourced that, it’s not my problem’,” said Deady.
“From health and safety to cyber security, the outsourcing of any business function requires careful consideration of the risks and benefits. You may be able to outsource the job, but you can’t outsource the risk.”
Deady emphasises that strong processes including well communicated policies and procedures, defined roles and responsibilities, ongoing monitoring of performance with documented KPIs, and clear exit strategies and termination processes are all essential to protecting businesses.
“At the onboarding stage, it is crucial that SMEs consider the following: Do you really know who you will be doing business with? Do you know what risks your outsourced providers may pose to your business?” she said.
“It is imperative that SMEs carry out risk-based due diligence to understand who their suppliers are. Companies must invest in understanding not only the financial standing of their suppliers but also their reputation, governance, compliance, corporate structures and cyber security frameworks.”
Choosing the right model
Sharon Melamed, Managing Director at Matchboard, identifies a critical knowledge gap affecting approximately half of Australian SMEs engaging with business process outsourcing providers.
“With 30 years’ experience in outsourcing in many countries, I speak to hundreds of SMEs a year about how they can make outsourcing a success. One of the big pitfalls is not knowing which model you’ve signed up for,” said Melamed.
“Around half of SMEs are on a managed service arrangement with a BPO, and the other half are on a staff leasing model. They are completely different in terms of both pricing and deliverables. With staff leasing, the BPO is not responsible for KPIs and the offshore team is under your management.”
Melamed notes that location selection has evolved significantly in recent years, with traditional outsourcing destinations expanding.
“Another area I help SMEs with is choosing the right location and vendor for their needs. Fiji and the Philippines are the most common locations requested,” she said.
“Up until a few years ago, Fiji was known more as an island paradise, but now it’s a business paradise as well for everything from customer service to bookkeeping and admin roles. In terms of vendors, there’s no one size fits all, and there are hundreds of BPOs we’ve captured information on so can recommend the best fit for each requirement.”
AI as outsourcing tool
Steve Rotter, Chief Marketing Officer at DeepL, argues that artificial intelligence itself represents a form of outsourcing that can deliver significant returns for businesses operating globally.
“For businesses that operate globally, creating multilingual content from websites and email campaigns to social media content is key to a successful digital marketing strategy. Localisation of content is essential for driving growth and equally, establishing meaningful connections with global audiences,” said Rotter.
“In fact, recent data shows that 96 per cent of marketers reported a positive return on investment from their translation and localisation projects, with 65 per cent reporting an ROI of 3x or greater.”
Rotter identifies three primary benefits of integrating machine translation and AI-powered writing tools into digital marketing technology stacks.
“The benefits of this include but are not limited to: increased efficiency, AI translation allows for speedier, more streamlined project delivery; do more with less, when you save time in the translation process, project teams can spend more time producing more content; quality versus quantity, harnessing the power of high-quality AI translation tools can prove more accurate, nuanced translations,” he said.
“Ultimately, by leveraging machine translation and embracing AI, businesses can optimise their localisation workflows, improve the quality of their content, and maximise their ROI.”
Strategic partnership approach
Christina Foxwell, CEO at Ignite Purpose, shares insights from establishing offshore operations that transformed her consulting practice’s cost structure and growth trajectory.
“Eighteen months ago, as a CEO facing pressures to cut costs and boost output to expand our practice, I turned to outsourcing, a strategy many Australian companies are exploring to stay competitive,” said Foxwell.
“This journey illuminated the importance of effective outsourcing through robust partnerships, leading to the establishment of our Ignite Purpose Philippines operation. This move embedded outsourcing as a strategic element of our global operations, providing benefits not only to us but also to our clients.”
Foxwell reports that outsourcing can significantly alter cost structures, potentially cutting payroll expenses by two thirds, whilst connecting businesses with dedicated, skilled teams.
“It does more than save money; it connects you with a dedicated, skilled team passionate about your projects, bringing an unmatched level of energy and expertise,” she said.
The key to successful outsourcing, according to Foxwell, lies in integration rather than segregation. “The key to successful outsourcing lies in treating your outsourced team as an integral part of your own, not merely as an external resource. This mindset fosters a collaborative environment where outsourced staff are engaged and take ownership of their work, aligning closely with client objectives,” she said.
“From our experience, such partnerships boost productivity and satisfaction on both sides. You not only save money and enhance output but also collaborate with people who are keen to help your business succeed.”
Foxwell emphasises that effective outsourcing extends beyond immediate financial benefits to provide the capabilities needed for significant scaling. “The broader impact of effective outsourcing goes beyond immediate financial benefits; it equips your business with the manpower and capabilities needed to significantly scale operations,” she said.
“Just one year after adopting this strategy, we successfully launched a global business, an accomplishment that would have been unattainable without the strategic use of outsourcing. Are you ready to harness outsourcing as your competitive advantage?”
The convergence of AI capabilities, evolving offshore markets and heightened regulatory scrutiny means SMEs must approach outsourcing with greater sophistication than ever before. Experts agree that success requires moving beyond price comparison to evaluate cultural fit, risk management frameworks and long-term strategic alignment with potential partners.
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